Why is an Agreement to Sell Important in a Real Estate Transaction?

An Agreement To Sell is one of the most important legal documents when it comes to a real estate transaction. There are many reasons that this so. This article explores all the possible reasons for the same.

Before signing on the dotted line to gain ownership of your home, as a buyer of real estate, you must make an Agreement to Sell to protect yourself from any legal complications.

Your home is the largest and often most expensive investment you will make in your lifetime; thus, you cannot afford to take a chance and risk losing it due to an error. Therefore, it is crucial that you examine all of your homeownership rights.The agreement to sell is one of the first steps in formalising a verbal agreement between you, as the buyer, and the seller of the property.It is also critical to understand that there is a lot of difference between an Agreement to sell and an Agreement Of Sale. 

Prior to the actual transaction, the buyer and seller sign a Agreement to sell with mutually acceptable conditions.

Defining an Agreement To Sell

This contract contains stipulations agreed upon by both the seller and the buyer for the future transfer of property. Therefore, if you are acquiring a property from the seller and you and the seller have verbally agreed on certain criteria, such as the date of the transaction, the amount of earnest money to be paid, the return of the amount, etc., such agreements should be converted to writing. As the homeowner, it is your responsibility to attach a condition requiring the seller to present all government documentation at closing to demonstrate your legal ownership of the property.These papers include the letter of possession, any housing society transfer documentation, forms from the unit owners' association, etc.

Dates & Timelines

The sale agreement must specify the duration (date) within which the transaction will be completed.The buyer and seller may agree on a convenient day for both parties.A timetable extension should also be noted if one is agreed upon.The clause should also include the essential condition that if the transaction is not completed within the specified time limit, it is null and invalid and the seller may seek a new buyer.

Refund Clauses

Prior to finalising the sale of a property, the seller receives earnest money from the potential buyer.This is a kind of trust deposit that allows the seller to hold onto the property for the buyer prior to the sale.On occasion, the buyer may cancel the purchase without receiving a refund of the money.This is a common cause of contention between the two parties.To avoid discord, it is best to include the clause.In this situation, if the property is not sold within the specified time frame, the transaction is null and invalid, and the seller must return the refund buyer for the amount paid.

Indemnity Clauses

In certain circumstances, the seller of a property conceals information about the property, such as illegal construction, a defect in the title deed, or a breach of the sales contract.Consequently, the purchaser often loses both money and peace of mind due to legal issues.Therefore, the sales agreement should contain a clause in which the seller indemnifies or protects the buyer against all types of damages and losses that may occur from insufficient or incomplete legal formalities.

Clause of Exclusivity

If a verbal agreement exists between the buyer and seller that the buyer-selected property would be retained exclusively for the buyer and not sold to another buyer, and the seller sells the property to a third party, you will be unable to pursue your rights since the agreement was not recorded.Therefore, an exclusive clause must be included in the sales agreement.This will indicate that the property is kept exclusively for you (the buyer) and that the seller is barred from engaging into discussions or agreements with other parties over the property you have chosen.

Due Diligence

You may be familiar with the term "due diligence," in which the seller certifies the property's legal ownership at the time of sale.You must ensure that the sales agreement has wording obliging the seller to provide the buyer with all the information, legal documents, and help required to establish the property's legitimacy.

Title Check

This section should clarify that the seller has made all property-related payments, including energy and water bills, property tax, and maintenance fees, until the closing date.